The ‘why’ of tuition increases

A look at the PSU budget

There is a clear and obvious malaise in American higher education.


Tuition and fees are climbing nationwide at an unprecedented pace as state funding dwindles. Fewer employers are impressed by college credentials, leading to record unemployment for college graduates, burying even more of the American public under inescapable quantities of debt. There is talk of a higher education bubble soon coming to burst. For the first time, there exists a very real possibility that the next generation may choose to be less educated than their parents.

At Portland State, the problem is keenly felt. Tuition is projected to increase by roughly 9 percent for the 2012–13 year. Departmental cuts are widespread and deep; the College of Liberal Arts is slated to lose upwards of $2 million. State support, which has declined consistently for over 20 years, will account for barely 20 percent of the PSU budget this year.

It is easy to feel overwhelmed by such a bleak forecast, when ill economic news is already in healthy supply. Blame has been cast from all sources, in all directions. Ignorant voters. Fat-cat politicians, dealing only in the short-term. University officials obsessed with reputation and shiny new infrastructure, instead of manageable tuition levels.

So much anger, yet so few solutions.

But this is hardly surprising. Does anyone, really, understand the nuances of how a university operates? How a university budget works?

The expectations of the various constituencies at the university are all different and often contrasting. Students demand lower costs, while faculty expect more support in terms of funding and resources, etc. This places university administration in a difficult and somewhat unforgiving situation—one in which no one involved, even under the best leadership and during the best of times, leaves completely satisfied.

The Oregon state legislature has also found itself burdened by forced austerity, and as a result a majority of the funding for the university now comes from tuition and fees. As recently as 2009, Oregon ranked 47th in state funding for higher education; that standing can really only drop if this trend continues, and tuition will continue to increase.

What to do? How has PSU coped with this frugal climate?

Operating budgets have been reduced, as a start. Other sources of funding, be they philanthropic or grant-based, are also being pursued. Community partnerships and connections with the private sector have also been bolstered.

With funding hit so hard, it is important to look into where money can be spent and where it can be saved. The pain of plummeting state support can be soothed through smarter use of available funds, and smarter ways of funding future projects. Adaptability is a more enduring strategy than the most nearly perfect method, used for every situation with no regard for the nuances.

Building projects like the new Rec Center, the new science building and University Pointe (a residence hall currently under construction) can provide long-term boosts in revenue by increasing enrollment. While increases in enrollment themselves carry an additional financial obligation (services to the newly admitted students), the goal is to increase the amount of non-Oregon residents recruited into PSU.

Out-of-state students can help immensely to defray the costs of higher education. As out-of-state tuition stands at just a little below triple that of Oregon residents, an out-of-state student can literally provide for the education of three in-state students.

Realistically, for the university to continue to maintain a healthy operation, broader, multiple-spectrum strategies must be employed.

On Feb. 19, The Oregonian reported that the Oregon University System would reach a reserve account of $200 million by June 30, 2012, owing to record enrollment. Of that $200 million, PSU would be the owner of nearly a quarter—essentially sitting on $52.8 million as tuition prices continue to creep higher. Ire was swift.

Every university is required by the state to hold a certain amount of money in reserve. The industry standard is between 5 and 15 percent of the operating budget, the purpose of which is twofold: emergency and opportunity, should some unforeseen circumstances occur across the fiscal year. PSU’s reserve account, projected to reach $52.8 million by June 30 of this year, is just over 18 percent.

This 3 percent excess (approximately $8 million) is owed primarily to a sudden infusion of state funds at the end of the last year which, unfortunately, arrived alongside a cut in permanent funding. The rest is intended to soften the blow of future state cuts. In the meantime, permanent savings (the fund balance is temporary) will continue to be sought. In other words, the vast majority of the fund balance is already tied down.

And the faculty? How do they feel about these massive cuts? How have professors responded to the pinch of declining state funding?

The administration tries to stem costs as much as possible, while faculty try to get as much as they can for their membership. This relationship between the two can get testy, as seen in the recent negotiations over the faculty union contract. It is not always easy.

But students also have a sizable role in determining the direction of the PSU budget. The Student Senate is involved in every increase in student fees, and tuition rates are established under the auspices of a student tuition review and advisory committee. Participation is key to affecting the change students want in the direction of PSU. As a corollary, the first (and best) measure is to simply stay informed.

Oregon not only spends less on its students than most states; it also has extremely low tax revenue per capita. This is due to several key factors, which include the adamant refusal to implement a sales tax, and the general Oregonian hostility toward any increase in property taxes.

This contributes to a trend which means that Oregonians tend to vote for measures that indirectly deplete the funds that would otherwise support higher education (such as the implementation of mandatory prison sentences).

Oregonians vote for such things because, like all of us—students, faculty, universities and state government—they just don’t have enough money. No one seems to, these days. This is penny pinching gone rampant.

The demon is not frugality—austerity can itself lead to great innovation, and smarter use of what is available. The question is, what immediate cuts will hurt us most in the long run? And, by proxy, what investment will yield for us the greatest prosperity in the long run?

There is a clear and obvious malaise in American higher education. Of that, there is little doubt.

Still, taking the medicine might be a tough sell.


  1. So… it seems that, at least in this piece, the Vanguard is sympathetic to the poor administration and the budget and planning who are making such tough decisions in this terrible economic climate.

    Sure, they are.

    The problem they’re having, you see, has nothing to do with enrollment, or getting students enrolled. The Rec center? University Pointe? Yeah, right, let’s pull the students from out-of-state in.

    But the fact is, there are a helluva lot more in-state students, who aren’t taking full course loads, and whaddayaknow, as Monica Rimai put it so succinctly while sitting in front of a mostly empty ballroom, “That nine-percent increase might have been a bad idea.” No shit, really? Here’s the thing: The more students they enroll, the more services that those students require for support. However, the less money those students actually generate if they’re going part-time. And we’re seeing a huge number of students who are going part time, because holy crap, it’s expensive to be here.

    They’ve got a 4% cut across the board coming up, but were basically told don’t cut advising – that’s the ticket to getting students to taking full course loads, see. And of course, there’s also things like Performance-Based Budgeting – a fancy way of saying that grade inflation is almost guaranteed, since departments get funding based on how many students they graduate.

    So, this whole raising-tuition-so-we-can-fund-the-institution? Yeah, that’s sort of proving to not work, isn’t it?

    It’ll be interesting to see the Vanguard tackle this, and the situation of the $300,000 shortcoming with OIT resulting in loss of jobs (The Portland Mercury scooped you there, Vanguard – will we hear anything from our on-campus paper about that?), and all of the other things coming up in the upcoming issues.


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